An Introduction to the Chinese Power System and Its Reform

  • Michael G. PollittEmail author


This chapter introduces the Chinese power system and the background to the reform process which began in March 2015 with the publication of the No. 9 document of the China State Council on ‘Deepening Reform of the Power Sector’. Inter alia, this set of reforms seeks to introduce wholesale power markets to trade electricity under longer- and medium-term contracts and via spot markets. It also introduces incentive-based regulation of electricity network tariffs. In doing so it moves the pricing of both wholesale and retail electricity away from a regulated system of tariffs towards market-determined prices for industrial electricity customers. This represents a radical break with the past for China and a significant extension of the role of a market in a sector still dominated by massive state-owned utilities.



  1. Alva, H. A. C., & Li, X. (2018). Power sector reform in China: An international perspective. Paris: IEA Publications.Google Scholar
  2. An, B., Lin, W., Zhou, A., & Zhou, W. (2015). China’s market-oriented reforms in the energy and environmental sectors. Paper presented at the Pacific energy summit. Retrieved from
  3. BP. (2016). Statistical review of world energy 2016, BP.Google Scholar
  4. CEC (China Electricity Council). (2013). Electricity industry statistics summary 2012. Internal report, China Electricity Council.Google Scholar
  5. He, X., & Reiner, D. (2016). Electricity demand and basic needs: Empirical evidence from China’s households. Energy Policy, 90, 212–221.CrossRefGoogle Scholar
  6. International Energy Agency [IEA]. (2014). China PRC: Electricity and heat for 2014. Retrieved from
  7. International Energy Agency [IEA]. (2018). CO2 emissions from fuel combustion: 2018 edition. Paris: OECD.CrossRefGoogle Scholar
  8. International Energy Agency [IEA]. (2019). Coal information: 2019 edition. Paris: OECD.CrossRefGoogle Scholar
  9. Kahri, F., Williams, J. H., & Hu, J. (2013). The political economy of electricity dispatch reform in China. Energy Policy, 53, 361–369.CrossRefGoogle Scholar
  10. Lin, K. C. (2008). Macroeconomic disequilibria and enterprise reform: Restructuring the Chinese oil and petrochemical industries in the 1990s. The China Journal, 60, 49–79.CrossRefGoogle Scholar
  11. Lin, K. C. (2014). Protecting the petroleum industry: Renewed government aid to fossil fuel producers. Business and Politics, 16(4), 549–578.CrossRefGoogle Scholar
  12. Lin, B., & Ouyang, X. (2014). A revisit of fossil-fuel subsidies in China: Challenges and opportunities for energy price reform. Energy Conversion and Management, 82, 124–134.CrossRefGoogle Scholar
  13. Liu, Z. (2015). Global energy interconnection. San Diego: Elsevier.CrossRefGoogle Scholar
  14. Ma, T. (2016). China’s 5 year plan for energy. The diplomat. Retrieved from
  15. Mou, D. (2014). Understanding China’s electricity market reform from the perspective of the coal-fired power disparity. Energy Policy, 74, 224–234.CrossRefGoogle Scholar
  16. National Development and Reform Commission PRC China. (2016a). An overview of 13th five year plan. Retrieved from
  17. National Development and Reform Commission PRC China. (2016b). How China’s 13th five year plan climate and energy targets accelerate its transition to clean energy. Retrieved from
  18. Olivier, J. G. J., Schure, K. M., & Peters, J. A. H. W. (2017). Trends in global CO2 and total greenhouse gas emissions. Summary of the 2017 report, The Hague: PBL Netherlands Environmental Assessment Agency.Google Scholar
  19. Paltsev, S., & Zhang, D. (2015). Natural gas pricing reform in China: Getting closer to a market system? Energy Policy, 86, 43–56.CrossRefGoogle Scholar
  20. Sun, C., & Lin, B. (2013). Reforming residential electricity tariff in China: Block tariffs pricing approach. Energy Policy, 60, 741–752.CrossRefGoogle Scholar
  21. Wang, Q., & Chen, X. (2012). China’s electricity market-oriented reform: From an absolute to a relative monopoly. Energy Policy, 51, 143–148.CrossRefGoogle Scholar
  22. Xu, Y. C. (2017). Sinews of power: Politics of the state grid corporation of China. Corby: Oxford University Press.CrossRefGoogle Scholar
  23. Yu, H. (2014). The ascendency of state-owned enterprises in China: Development, controversy and problems. Journal of Contemporary China, 23(85), 161–182.Google Scholar
  24. Zhang, Z. X. (2014). Energy prices, subsidies and resource tax reform in China. Asia and the Pacific Policy Studies, 1(3), 439–454.CrossRefGoogle Scholar


  1. China Electricity Council. (2015). Annual electricity statistics 2015. Available at:
  2. China State Council. (2015). 关于进一步深化电力体制改革的若干意见. Deepening Reform of the Power Sector, Document No. 9, March 21. Retrieved from
  3. China5e Research Centre. (2016). 中国电改试点进展政策研究与建议. The Policy Study of China’s Power Sector Reform Pilot Project Development and Recommendations. China5e Research Centre Report, Beijing.Google Scholar
  4. National Bureau of Statistics (NBS). (2015). China energy statistical yearbook 2015. Beijing: China Statistics Press.Google Scholar
  5. National Bureau of Statistics (NBS). (2016). China electric power yearbook 2016. Beijing: China Electric Power Press.Google Scholar

Copyright information

© The Author(s) 2020

Authors and Affiliations

  1. 1.Judge Business SchoolUniversity of CambridgeCambridgeUK

Personalised recommendations